1. These appeals are by the defendant, the Burdwan Electric Supply Company and arise out of suits brought by the plaintiffs now respondents, for a declaration that the defendant company cannot charge at a rate exceeding six anna per unit with a rebate of 10 per cent, if bills are paid within ten days of their presentation, and with a further special rebate of one anna per unit for house wiring done by the company; also for a declaration that the defendant company cannot get any kilowatt charge, or impose anything more than the above rate, and for an injunction restraining the company from cutting off electric connexion and from discontinuing the supply of electric energy.
2. The circumstances which resulted in the institution of the suits are shortly as follows: The plaintiffs-respondents are rate-payers of the Burdwan Municipality, and are the owners of certain holdings situate within that Municipality. The defendant company applied to Government in 1920 for a license to supply electricity to that town, and on 30th July 1920 entered into an agreement with the Municipality to supply electric power within the compulsory electric area to private consumers at the rate of six annas per unit with a rebate of 10 per cent. if. the bills were paid within ten days of presentation. Thereafter it appears that on 3rd July 1925 they issued a private notice offering a rebate of one anna per unit to those persons who got their house wiring done by the defendant company. The plaintiffs accepted the offer and got their house wiring done by the company. Subsequently however on 5th September 1927, the company sent some printed agreement forms to the plaintiffs in which they demanded a rate of seven annas per unit in addition to a kilowatt charge of Rs. 5 per month. On receipt of these demands the plaintiffs instituted the present suits.
3. The Munsif gave them a declaration that they are entitled to obtain a supply of electric energy from the defendant company at the rate of seven annas per unit with the two rebates referred to above for prompt payment and for having their wiring done by the company; further that the defendant company could not get any kilowatt charge, The prayer for injunction was granted for a period of. three years from 7th January 1927.
4. The defendant company then appealed to the District Judge in two of the cases. The learned District Judge held that the plaintiffs could not rely on the agreement between the Municipality and the company, but that what took place amounted to a contract between the company and the plaintiffs, although there was nothing in writing between the parties, and that in that view of the matter the plaintiffs were entitled to the rate of seven annas less the two rebates, i. e., five annas per unit only. In one of the appeals this rate was decreed up to the date of disconnexion and in the other up to 8th February 1928. From 8th February to the date of execution of a fresh agreement the rate was to be six annas, i. e., seven annas less one anna per unit for wiring rebate.
5. With regard to the question of the kilowatt charge the District Judge held that the rates claimed by the company as specified in the sanctioned agreement (Ex. 13) are not in accordance with law, that it amounts to a system of double charging and cannot be allowed in view of Section 23 (3), Electricity . Act. The learned Judge directed accordingly that the company must modify its agreement form by deleting from the schedule thereof the words:
plus rupees five per month per kilowatt of the rated capacity of the consuming devices installed,
and also the words
provided that the combined charges shall not exceed the flat rate of 8 annas per unit metered during any calendar year.
6. As regards the injunction it was held that there had been some confusion on the point in the trial Court, and that it was not necessary to issue an injunction.
7. Against that decision the defendant company has preferred the present second appeals, and the two main points which arise for decision are firstly, whether the District Judge was right in holding that the plaintiffs are only liable to pay at the lesser rate, viz., five annas per unit after allowing rebate as stated above; and secondly, whether he was right in holding that the form of agreement is not in accordance with law.
8. The decision of both points turns upon the construction of Sections 21 and 23 of the Act. With regard to the first point it was argued for the appellant that there was no valid or completed agreement between the company on the one hand and the plaintiffs on the other, and that under the terms of Section 21 the company could not enter into any agreement with consumers which was not ultimately sanctioned by Government; in other words, that any such agreement is conditional upon the sanction of Government being accorded to it, and without it is null and void. On behalf of the respondents on the other hand it was contended that Section 21, which speaks of regulating the relations with consumers, has nothing to do with the charges to he made for energy supplied, and that the section which deals with that matter is Section 23. It was further argued that from the terms of the latter section it is clear that the making of an agreement for the supply of energy is left to the parties, that is to say, to the company and the consumers, subject to the condition that no undue preference shall be shown to any person. As the agreement in question was made before sanction had been accorded by Government it is argued that it was open to the parties to make any arrangement they pleased, and that at that stage there could be no question of any undue preference, since no one else had been asked to pay any higher rate.
9. We think it is doubtful from the general context of Section 21 and from the use of the expression 'to regulate his relations with whether the section covers the rates charged for electric energy. The section which deals with the charges for energy is Section 23, and it is expressly laid down in Sub-section (1) thereof that 'a licensee shall not, in making any agreement for the supply of energy, show any undue preference to any person, but may save, as aforesaid, make such charges for the supply of energy as may be agreed upon, not exceeding the limits imposed by his license.'
10. Apparently therefore it was open to the company to enter into the agreement in question with the consumers. The agreement no doubt was of a somewhat vague and indefinite character, but the Court of appeal below has held that it amounted to a contract as between the company and the plaintiffs, and we are not disposed upon this point to disturb the finding arrived at in the Court below. Certainly the attempt to take advantage of technicalities and to go back upon the undertaking given by it comes with all ill grace from the company, seeing that it had induced the plaintiffs to take their supply of energy upon the terms held out to them. We are not prepared therefore to interfere with this part of the judgment and decree of the Court of appeal below, subject to this modification, consequent upon certain previous proceedings in this Court that the respondent Srimati Kumud Kumar Choudhury will be entitled on the terms set forth in the judgment of the Court of appeal below to be supplied to electric energy for a period of eighteen months from the date when her electric supply is restored.
11. The second point relating to the form of agreement stands on a different foot-ting. In the schedule to the agreement (Ex. 13), we find the rates of charge specified as follows:
For lights and fans seven annas per unit metered plus five rupees per month per kilowatt of the rates capacity of the consuming devices installed less rebates that may be announced here after. Provided that the combined charges shall not exceed the flat rate of eight annas per unit metered during any calendar year.
12. The learned District Judge held that this is a double system of charging and cannot be allowed in view of Section 23 (3) of the Act. Now that subsection is in the following terms:
In the absence of an agreement to the contrary, a licenses may charge for energy supplied by him to any consumer; (a) by the actual amount of energy so supplied, or (b) by the electrical quantity contained in the supply, or (c) by such other method as may be approved by Local Government.
13. The section appears to give the licensee the option of adopting any one of these three methods, and apparently he has adopted the third. The method embodied in the schedule of the agreement has been approved by Government and has been duly sanctioned. It is difficult to understand therefore how it can be said to be illegal. The responsibility of deciding upon the method devolves upon Government, and it was no doubt contemplated that Government with the aid of its technical advisers would select a method which would be fair both to the supply company and the consumers. The method in question having been duly approved by Government as required by Sub-section (3) (c), Section 23, and having bean duly sanctioned and incorporated in the agreement, we do not think that it is open to the plaintiffs to object to it, so long as the combined charges, that is to say, the flat rate plus the charge per kilowatt do not exceed the flat rate of eight annas par unit as stated in the proviso.
14. Upon this point therefore we think that the decision of the Court of appeal below cannot be supported. The result therefore is that the appeal is allowed in part and so much of the judgment and decree as effect alterations in the form of the agreement, as previously described are set aside. In other respects the decision of the District Judge is affirmed subject to the modification mentioned above. We make no order as to costs. The two Rules will stand discharged.
15. Before considering the points raised in these cases I must express my great regret at the absence of any evidence regarding technical matters which could have been better elucidated if an export were examined on behalf of the defendant.
16. My learned brother has dealt with the point made by the appellant that the rate of charge must depend on the condition of supply as understood under Section 21, Electricity Act, 1910, and the rate fixed by the Local Government cannot be varied without its sanction. That this is not so is clear from the opening words of Section 23 (3), of the Act where the modes of charge for supplying energy are laid down, 'subject to any agreement to the contrary.' There is no doubt that the consumer and the supplier may enter into any agreement as to the charge for supply of energy subject to the limitation mentioned in Section 23, namely, that there should be no undue preference to any particular consumer or consumers, and further, subject to the limitation that such charge shall not exceed that sanctioned by the Local Government in the license of the licensee: Mears' Law reporting to Electrical Energy in India, Edn. 3, 1930, p. 207.
17. The real question which has been argued at great length in these case3 is whether the rate of charges as contained in the form of agreement sanctioned by the Government is according to law. The effect of the finding of the Court below is that the sanction by the Local Government of the charges as mentioned in the agreement is ultra vires of the Government; thus a very important point has been raised which has got to be examined. Apart from the fact that the Local Government has, with the advice of its expert officers sanctioned the rate of charges, we have to sea whether their act violates the provisions of the law as contained in the Act.. Under Section 23 (3), three modes have been provided for permitting the licensee to charge for the energy supplied; (a) by the actual amount of energy so supplied, or (b) by the electrical quantity contained in the supply, or (c) by such other method as may be approved by the Local Government.
18. Now the question is what is meant by ' such other method' and whether that method should be totally different from the two preceding methods, or may be a combination of the two or may be one of the preceding methods with some other method added to it. I have felt some difficulty in construing the words in view of para. 10 (1) of the schedule to the Act, which empowers the consumer to require the licensee to charge according to either of the first two methods above referred to, thus giving some indication that the method adopted by the Local Government should be different from any of them. But I am not sure that the words 'such other' must be interpreted as preventing the Government from utilizing either method with such modifications as they think fit. In the present case the rate sanctioned is:
seven annas par unit plus Rs. 5 per month per kilowatt of the rated capacity of the consuming devices installed . . . provided that the combined charges shall not exceed the flat rate of eight annas per unit metered during any calendar year.
19. There is nothing in the evidence to clear up the meaning of the words 'kilowatt of the rated capacity of the consuming devices installed.' But I take the explanation as given by the learned advocate General and proceed on the assumption that it is correct. He says that it is not the minimum charge within the meaning of Section 22 and para. 11 (A) of the schedule, His case is that both the charges, namely, the charge per unit and the kilowatt charge are two methods of indicating the same charge, and according to him, the kilowatt charge varies with the amount of consumption with the limitation that the combined charges cannot in any event exceed eight annas per unit during a calendar year, and so when there is no consumption, there will be no kilowatt charge. I should have thought that as the words stand in the agreement, 'kilowatt of the rated capacity of the consuming de-vices' meant same sort of fixed charge because 'the consuming devices installed' mentioned in the preceding portion of the agreement mean the number of lights and fans put on a particular premises. But I take the meaning to be what is given by the learned advocate for the appellant. That being the idea with which the form of agreement was sanctioned, it would seem that the Local Government has sanctioned the method which is allowable under Section 23 by combining Clause (a), that is, with the charge for the actual energy supplied with the kilowatt charge which I take to mean the charge for keeping ready at hand the amount of energy that may be necessary in order to meet the full demand of the consuming devices installed on consumer's premises. For instance, there are 20 lights and five fans installed in a premises, each light consumes 40 watts of electrical energy and each fan 100 watts. The total energy to be supplied would be 1,300 watts or 13 kilowatts (1 kilowatt=1000 watts). The consumer is to be charged according to the agreement for the actual amount of energy consumed plus proportionate kilowatt charge. But the supplying company is to keep 1,300 watts always ready in case the consumer makes the full demand according to the capacity of the consuming devices. It may therefore be said that the charges for actual consumption and for kilowatt are two parts of the same method of charging. And if the two modes are different, it is ultra vires of the Local Government to fix them under Section 23 (3) (c).
20. It has also been argued that the charge sanctioned by the Local Government is covered by Clause (4) (a), Section 23. It says that a charge under Clause (3) (c), Section 23, namely, the charge approved by the Local Government on a method other than (a) and (b) may be based upon and vary according to any one or more of the considerations, mentioned therein one of which is consumer's load factor. I have again to regret the absence of evidence with regard to the technical terms used in this case. 'Load factor' has been differently defined, at any rate, so it seem3 to a layman. Mr. Mears makes it to mean the ratio between the actual output of energy at the station and the possible maximum output. In Hawkins' Electrical Dictionary, it is defined as the ratio of the average power spent during a certain period and the maximum. In Electrical Engineering, Vol. 8, it is defined as the average power divided by the maximum power in a given time. I take the expression to mean, as explained to me by Mr. Roy, appellant's counsel, the ratio between the actual consumption and the actual energy necessary to supply to the full capacity of the consuming: devices, though it seems to me that 'load factor' refers to the production and consumption of energy at the station. Mr. Roy argues that the method adopted by the Court below is under this head, as it permits the charge for actual consumption and also the charge for the amount. of energy required for the maximum supply. This explanation may be correct, but in view of my opinion on Clause (3), Section 23 it is not necessary to pursue this matter any further.
21. If the charges as sanctioned by the Local Government are high, no hardship need be felt by a consumer because of the method adopted by the Local Government for under para. 10 (1) of the Schedule a consumer, who objects to the method of charge approved by the Local Government under Section 23(3) (c) may, at any time by giving notice to the licensee, require him to change the method of charging to either (a) or (b) at licensee's option. I notice in Mears' book at p. 207 that the charge by the actual amount of energy supplied is a charge determined by a watt-hour metre and the charge by the electrical quantity contained in the supply, which is the usual method adopted, is by the ampere-hour metre, assuming the standard pressure. The consumer if ha is so minded and if he prefers the charge to be computed by any method other than the one approved by the Local Government may have it adopted by the licensee according to the law.
22. The learned District Judge considers the method adopted by the Local Government as a double system of charge with which view I am unable to agree. The learned Judge seems to have been influenced by his assumption that the kilowatt charge is the minimum charge. For the appellant it is said that it is not such a charge as it varies with the amount of energy supplied, and may be less than the charge fixed or disappear when there is no consumption.
23. According to the view I take of this matter, so much of the decree of the lower appellate Court as directs, that the clause containing the kilowatt charge of Rs. 5 on the capacity of the consuming devices should be dropped from the agreement sanctioned by the Local Government, must be set aside and in other respects, as held by my learned brother, the said decree will stand.
24. I think I should notice a fact that though the company originally agreed to accept the flat rate of six annas per unit, the Local Government considered it necessary to allow the company to charge more, the reasons for which are to be found in a Government letter where it is said that the outlay and little prospect of adequate immediate return have induced the Government to sanction the higher charge. The learned Judge also has found that in view of the amount of capital employed by the company and of small demand for supply at present, a charge of seven annas per unit is not too high.
25. The result is that the decree of the lower appellate Court is modified in the way suggested above.
26. The parties will bear their costs throughout.